Elon Musk says Tesla is 'pedal to the metal' even with potential recession looming

3 months ago 10

SpaceX Chief Engineer Elon Musk takes part in a joint news conference with T-Mobile CEO Mike Sievert (not pictured) at the SpaceX Starbase, in Brownsville, Texas, U.S., August 25, 2022.

Adrees Latif | Reuters

Elon Musk sees elements of a recession in China and Europe and says that the U.S. Federal Reserve is raising interest rates by too much.

But when asked on Tesla's third-quarter earnings call on Wednesday how his electric car company will fare in a potential recession, the world's wealthiest person expressed little concern.

"To be frank, we're very pedal to the metal come rain or shine," Musk said in response to an analyst's question. "We are not reducing our production in any meaningful way, recession or not recession."

Tesla reported adjusted earnings of $1.05 per share, topping analysts' estimates of 99 cents per share. The stock dropped 5% in extended trading as revenue came in at $21.45 billion, missing analysts' expectations of $21.96 billion. The company has lost 45% of its value this year.

Musk has been critical of the Fed, which has been lifting its benchmark interest rate to try and tamp down soaring inflation. He continued with that theme on Wednesday.

"The Fed's decisions make sense if you're looking in the rear-view mirror not if you're looking out the windshield," Musk said.

Still, even with the cost of capital on the rise alongside the prices for goods, Musk sees Tesla doing OK as electric vehicles replace gas-powered cars.

"The public at large realizes that world's moving towards electric vehicles, and it's foolish to buy a new gasoline car at this point because the residual value of that gasoline car is going to be very low," Musk said. "So, we're in a very good spot."

Musk added, "I wouldn't say it's recession-proof but it's recession-resilient, because basically the people of Earth have made the decision in large part to move away from gasoline cars."

The Tesla CEO also commented on his pending $44 billion acquisition of Twitter. He's currently enmeshed in a legal battle with the social media company even though he recently changed course and said he would follow through with his purchase agreement.

Musk said he is "excited about the Twitter situation" and that the company has "sort of languished for a long time but has incredible potential."

"The long-term potential for Twitter is an order of magnitude greater than its current value," Musk said.

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